Food for thought

Standard Bank CEO, Sim Tshabalala, addressed the International Catholic School Leadership Conference dinner, hosted by the Catholic Institute of Education (CIE), on Monday, 9 August, 2010. His talk focused on the ethics of conducting business, and the role of education in helping South Africa gain a competitive edge.

His talk follows below:

According to the website quickten.com, the Top Ten most hated professions in the world are:1) Traffic Wardens; 2) Bouncers; 3) Lawyers; 4) Recruitment Consultants; 5) Estate Agents; 6) Politicians; 7) Tele-sales; 8) Bankers; 9) Dentists; 10) PR People.

I have it on impeccable authority that Mark Potterton is incomparable for his humour. He taught my wife, Lebo, at that marvellous institution, Sacred Heart College. So, when Mark asked me to address you tonight, Lebo I and agreed that he was being characteristically wickedly ironic for asking a former lawyer, ranked third in revulsion, and a practising banker, ranked eighth.

Perhaps my saving grace is that I, too, was privileged to Matriculate from Sacred Heart College.I know Mark approves and I am sure that the twin patron saints of education, Saint Thomas Aquinas and Saint John Bosco, would also approve. I also had the privilege of spending a year at that fine Catholic University: the University of Notre Dame. There is some magic in the link between Catholic places of learning, leadership, values and finance. I was therefore thrilled to find out that the University of Notre Dame is ranked tops on a list put together by Bloomberg of universities attended by chief executive officers of the 100 prime US financial firms. One of these CEOs has said that Notre Dame teaches performance, community, respect, integrity, diversity, teamwork and balance and that those values make organisations successful in the long run.

All of this is conclusive proof that education really is the “silver bullet”.

Let me quickly point out that I am conscious that there are people from countries other than South Africa present tonight. My argument is going to be confined to South Africa for time considerations, but a lot of the themes apply to the rest of the African continent.

A company is an organ of society and a corporate citizen. Its executives are there to manage it as a going concern, and to create value for stakeholders. Responsible business leaders are stewards who should want to preserve, nurture and strengthen their business, and aim to hand it on to the next generation in better condition than they found it. Stakeholders include society, government, staff, customers and future generations. They recognise that there is a duty of care here.

Consequently, responsible business leaders are guided by a broader set of goals than the narrow pursuit of short-term profit.

Let me be clear. Of course business leaders must spend most of their time and energy seeking to generate good and long-range profits to reward shareholders fairly for the risks they assume consequent on being invested in the company. Money given by them to us is a sine qua non for our business activities – no equity, no business – no business, no prosperity!

What are the specific challenges facing business leaders in South Africa as we aim to balance immediate profit and long-run responsibilities?

Looking broadly at South African society, I think that responsible business leaders are worried about the same kinds of challenges that keep thoughtful citizens awake at night. Left unchecked, these challenges would make it hard and expensive to do business. They increase costs, they increase risks, they reduce profits and they make capital and funding expensive.

We often find ourselves faced with proposed policies and regulations drafted by professionals who believe that the state should intervene heavily in markets because markets have failed society. In these circumstances, one of our biggest challenges is to reach outcomes that meet government’s and society’s entirely legitimate need to achieve profound, pervasive and permanent equity and transformation, without draining the dynamism from the economy.

It is remarkable that South Africa has the highest unemployment rate of any major economy.

Our country has another undesirable distinction: the highest level of income inequality in the world.

Whilst appalling, the news on HIV/AIDS is slightly better. Thankfully, the rate of new infections is starting to level off. But still one in eight South Africans is HIV positive.

Crime is a tremendous challenge!

Corruption is harder to measure, but has certainly become an all-too-regular topic in the newspapers.

On infrastructure, there are far too many unanswered questions about how our power, water, transport and telecommunications needs are going to be met in the near future.

I do not need to tell this audience that the overall education picture is simply atrocious.

These deficiencies in our education system look even worse in the light of global standards. Take the World Economic Forum’s Global Competiveness Report. This year, it found that an inadequately educated workforce was the second biggest constraint to doing business in South Africa. (Crime was first.) It went on to note that South Africa ranks in the 11th percentile for quality of the educational system, and stone last among 133 countries surveyed for the quality of our maths and science education.

In short, we have an education system that is not producing the skills that we need to fuel our economy. Instead, it continues to entrench inequality and unemployment ever more deeply with each year’s abysmal performance. This is nothing but a powder keg that is sure to be ignited by such poor performance.

So how should a responsible business leader deal with these challenges?

First, I believe we have a right and duty to remind our fellow South Africans that, simply by going about our businesses successfully and in an ethical way, we are already making hefty contributions to growth and development.

Second, South African business leaders need to be very sensitive to the realities of the socio-political environment in which we work. Having happily entered the post-1994 era unscathed, for far too long business has been aloof from the realities of a thoroughly third world country, with business leaders talking to one another about our own challenges and dreams, but dislocated from the responsibilities of today!

Admittedly, our conversations are often of the quality and potential effect similar to that of the Constantinople elite’s scintillating but inconclusive debates in 1453, when they argued about how many angels could dance on the head of a pin and what their gender was, whilst the Sultan Mehmet the Conqueror had the city under an effective and successful siege. Phantasms are fine, but we must engage society meaningfully! In particular, it is vitally important that we design products that serve the pressing needs of South Africa’s poor majority and that we invest in ways that maximise job creation. If we fail, Armageddon will be at our door.

Third, we need to continue to drive transformation and encourage diversity. We must contribute to achieving social justice.

Fourth, we should support an engaged civil society. Civil society organisations are an immense source of social cohesion.

Fifth, we need to be constantly vigilant about maintaining the highest ethical standards in our companies.

Sixth, we ought to rebut the persistently negative sentiment and undue pessimism that so many people have about South Africa.

Seventh, last, and most important, we need many more skilled workers to support the growth of our economy. We very badly need many more well educated people.

In the end, though, it comes down to teachers and principals. There are, therefore, two great responsibilities on your shoulders. We look to you to provide South Africa with its next generation of skilled people and leaders. And we expect you to provide the essential leadership that our schools need to create that next generation.

Looked at from the perspective of business, what kinds of leadership skills should be developed in schools? Again, I hesitate to offer advice to experts in their field. But since you asked, here are my thoughts:

We want to buttress South Africa’s national competitive advantage. So, because the world is globalising, we need versatile men and women. We wish for Renaissance men and women. We know you can produce them. We would like young people who have a personal and societal vision so that they can match that with society’s as well as that of whatever business they will work for. They should be able to inspire others with their vision. That vision must include other nations and cultures as well as the natural environment.

They need to be able to turn such vision into plans with specific objectives, initiatives to be undertaken and measurements to determine success or failure. In short, they need project management skills.

They should have discipline; in particular, they should be skilled at time management. They should know how to run meetings, from the one-to-one meeting to the large meeting.

They need to have values – to stand for something greater than themselves. Those values must be humane and they should stretch towards the highest ideals of human dignity. Ubuntu should be cardinal. They should realise that the essence of humanity is the living relations between the individual and others, the community, the cosmos and God. Compassion and empathy are important. They should live non-racism and non-sexism. They must appreciate diversity.

They must be people with initiative so that they can take action on the things that need to get done at work without being policed. They should therefore be at once volunteers and champions. Volunteers for being passionate about the things they are committed to. Champions for being professional and competitive, striving for excellence, but competitive in the constructive way contemplated by Mikhail Barishnikov when he said: “I do not try to dance better than anyone else. I only try to dance better than myself.” So they must also be energetic and resilient. They must know how to nurture their physical, mental and social health.

We desperately desire them to be literate, cultured and numerate. So they should learn to read extensively, appreciate the classics and value the arts because imagination, thoughtfulness, problem solving and innovativeness are crucial in fiercely competitive businesses. Furthermore, they need financial and economic skills – they should understand the basics of cash flow, income statements, and balance sheets as well as how financial, commodity and other markets work. They should appreciate risk and its role in life in general and in business in particular. They must be schooled in risk’s perennial partner, reward, so that they may calculate the balance between risk and reward in all endeavours.

We want people who can speak and write well. They will need to sell things and ideas, so they need to have skills in persuasion. Business is often about contestation for resources, so negotiation and diplomatic skills are vital. They must be capable of social networking – they must be schooled in etiquette and manners.

They must be patriots who are also citizens of the world in the sense meant by Abraham Lincoln when he said: “I like to see a man proud of the place in which he lives. I like to see a man live so that his place will be proud of him.” But we require them to cope in an interconnected and multicultural world so we are with Pablo Casals when he says: “The love of one's country is a splendid thing. But why should love stop at the border?” Indeed, I am with Leo Tolstoy on human solidarity when he writes in his The Wisdom of Humankind: “We can and must learn to love all people. Do not ask God to unite you. He has made you one already by placing his one and the same spirit in you all. Only cast off the things which divide you, and you will be one.”

Some might say that this is a tall order. I agree, but I am afraid that these are the skills and people that we need if South Africa is to shore up its national competitive advantage and take its rightful place among the family of nations as is so beautifully admonished in the Preamble to the Constitution of the Republic of South Africa.

In closing, let me say this. Yours is a prodigious task. The words of Robert McNamara, past president of the World Bank, are as true today as they were when he said them in 1982: “I have seen very few countries in the world that have such inadequate conditions. I was shocked at what I saw in some of the rural areas in the homelands. Education is of fundamental importance. There is no social, political, or economic problem you can solve without adequate education.” But South Africa needs you to succeed. I pray that you will continue with the courage and fortitude necessary to fulfil your mission. Thank you and good night!